Sensex surges 520 points on gas price hike

Mumbai, June 28 (IANS) A benchmark index of Indian equities markets surged almost three percent Friday, led by strong rally in energy stocks after the government approved a sharp increase in gas prices.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened in the positive at 19,093.18 points, closed at 19395.81 points, up 2.75 percent or 519.86 points from its previous day's close at 18,875.95 points.

The Sensex touched a high of 19,432.94 points and low of 19,093.18 points in the intra-day.

There was a strong buying support in oil and gas stocks after the government approved a proposal to almost double gas prices. The move is likely to help the companies like Reliance Industries and ONGC involved in gas production.

"ONGC and Oil India stocks rose by 5-7 percent in the morning, factoring in higher gas prices," said Bhavesh Chauhan, senior research analyst for oil and gas at Angel Broking.

However, some oil and gas companies came under pressure in the afternoon session after Finance Minister P. Chidambaram announced that cost of gas to power and fertilizer companies would be lower, indicating that the positive impact of gas price rise could be partially offset by higher subsidy burden.

"ONGC and Oil India declined after this announcement. Reliance Industries remained in the green as it is one of the key beneficiaries of the gas price increase. Additional volumes from KG D6 could be a key catalyst for the stock hereon," Chauhan said.

Among the major Sensex gainers were: Jindal Steel, up 7.89 percent at Rs.217.30; BHEL, up 6.90 percent at Rs.174.30; Tata Power, up 5.71 percent at Rs.86.05; Coal India, up 5.58 percent at Rs.302.95; Sterlite Inds, up 5.23 percent at Rs.83.50; and Gail India, up 4.75 percent higher at Rs.313.

Only one of the 30 Sensex scrips closed in the red. Hindustan Unilever closed 0.67 percent down at Rs.585.05.